Opening (IRA): KWEB May 17th 24 Monied Covered Call
Updated
Looking to get a fill on a monied covered call in KWEB (IVR/IV 12/33.2) while I wait around for some (or any) vol to show itself in the broader market. That IVR isn't great, but I'm going small so that I can potentially add at more favorable strikes/share cost bases should an opportunity present itself.
It's pre-market, so bid/ask is somewhat wide on both the shares and the short call, but I'm looking to buy a one lot and sell a -75 delta call against for around 26.09 in order to emulate the delta metrics of a 25 delta short put, have built-in short call defense, and to take advantage of IV skew on the call side (it's 39.4% at the 24 call strike; 32.4% at the 24 put).
On a side note, the on margin variant of a Plain Jane short put isn't paying spectacularly from a dollar and cents standpoint: the May 17th 24 short put is paying .37 at the mid, which isn't anything to write home about, but that would be on a BPE of 6.72 (5.51% ROC at max; 2.75% at 50% max; 23.63 break even) should you want to go the standard short put/acquire/cover route.
Break Even/Cost Basis in Shares/Buying Power Effect: 23.09
Max Profit: .91 ($91)
ROC at Max: 3.49%
ROC at 50% max: 1.74%
In all likelihood, I'll have to "penny up" if I don't get a fill for 23.09 ... .
It's pre-market, so bid/ask is somewhat wide on both the shares and the short call, but I'm looking to buy a one lot and sell a -75 delta call against for around 26.09 in order to emulate the delta metrics of a 25 delta short put, have built-in short call defense, and to take advantage of IV skew on the call side (it's 39.4% at the 24 call strike; 32.4% at the 24 put).
On a side note, the on margin variant of a Plain Jane short put isn't paying spectacularly from a dollar and cents standpoint: the May 17th 24 short put is paying .37 at the mid, which isn't anything to write home about, but that would be on a BPE of 6.72 (5.51% ROC at max; 2.75% at 50% max; 23.63 break even) should you want to go the standard short put/acquire/cover route.
Break Even/Cost Basis in Shares/Buying Power Effect: 23.09
Max Profit: .91 ($91)
ROC at Max: 3.49%
ROC at 50% max: 1.74%
In all likelihood, I'll have to "penny up" if I don't get a fill for 23.09 ... .
Trade active
My fill wasn't nearly as "sexy" as 23.09, which I somewhat expected, given the fact that I was pricing out the setup pre-market. In any event, filled for 23.37, .63 ($63) max profit; 2.70% at max; 1.35% at 50% max.Trade closed manually
Closing short of 50% max, for a 23.65 credit. .28 ($28) profit, 1.20% ROC.
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